ERP for warehouse management

30th April 2012

If you are a manufacturing company who engages in distribution as a sideline, simply as a means of delivering your manufacturing output to customers, then you are likely to be both appreciative of, and possibly overwhelmed by, warehouse management functionality in ERP. On the other hand, if you are primarily a distribution company, then you likely know how and why you make money and, when choosing distribution ERP software, will emphasize the features warehouse management that contribute the most to your operation.

Labor efficiency in warehouse management ERP

If labor efficiency is the key success factor in your distribution operation, you will want ERP to deliver a warehouse management system that has robust capability to optimize pick-and-pack strategies. One strategy might be to simply minimize pick time, while another, if space is limited and trailer turnover is critical, would be picking and staging complete orders most efficiently. The right warehouse management ERP should offer different picking options, allowing you to experiment and find the one that suits your company.

Levels of control

For some distribution operations, labor costs associated with picking, staging and loading a shipment are miniscule compared to the cost of an incomplete or erroneous shipment. Imagine that you were responsible for shipping the lighting and wiring kit for a new restaurant. The truck arrives on site, the wire is there, the light fixtures are there, the switches are there, the circuit breaker is there, but the electrical conduit…..somehow didn’t get on the truck. The electrical crew just stands around waiting, while the project manager desperately scrambles to postpone the arrival of the flooring and the furniture. In this case, your warehouse management system needs to have strong controls, and redundant verification loops.

Did everything for the order get picked?

Did everything for the order get staged?

Did everything for the order get on the truck?

Bin control

Another facet of warehouse management ERP is bin control and your required level of sophistication. When designing your controls for inventory control in ERP, you will learn that if you put generic inventory into a bin location, and then remove it in its entirety and ship it, you probably need a different level of bin control complexity than if you remove 100 units of inventory from a bin, count out forty units for an order, and return sixty units to the bin. And that is a different level of sophistication from being easily able to cancel the forty-unit order, and return forty previously allocated units to the original inventory location.

At the end of the day, using warehouse management effectively within (or without) ERP is about emphasizing capability when it aligns with your business strategy, and simplifying as much as possible the features that are not mission critical. If you are not able to do this effectively, you may end up with a warehouse operation that is more complicated than you want without any additional benefits. If distribution is not your primary source of profit, then you may have to take what you get; the ERP package will be decided on for reasons other than warehouse management. If this is the case, be prepared to overman in the short term, and figure out how to automate in the long term.